Oilfield services giants get a slice of Aramco's iktva pie as Saudi player dishes out $11bln

Oilfield services giants get a slice of Aramco’s iktva pie as Saudi player dishes out $11 bln

Saudi oil and gas giant Aramco has signed corporate procurement agreements (CPAs) with oilfield services majors Baker Hughes, Halliburton and SLB, among other companies, as part of its iktva program.

Illustration; Source: Aramco

Aramco signed 59 CPAs with 51 local and global manufacturers, valued at $11 billion, which are expected to reinforce its supply chain resilience and result in the development of materials manufacturing facilities in Saudi Arabia.

The agreements cover multiple strategic commodities, such as drilling chemicals, wellheads, switchgear, vibration monitoring systems, pipes, compressors, structure steel, fittings and flanges, and air-cooled heat exchangers.

They come as part of a strategic pillar of the Aramco in-Kingdom Total Value Add program (iktva), which sees the establishment of long-term agreements and commitments with supplier partners.

According to Aramco, the spending is expected to drive inward investment and the creation of 5,000 jobs over the next decade.

TechnipFMC is also among the companies that signed the agreements.

Mohammad A. Al-Shammary, Aramco Vice President of Procurement and Supply Chain Management, said: “The CPA holders will be our future strategic manufacturing partners for these commodities, and the agreements further broaden our localization infrastructure across the Aramco network.”

Under the CPA agreements, supplier partners agree to establish local facilities, transfer technology, perform local research and development, and develop the local workforce and supply chain, while gaining preferred status with Aramco, its joint ventures, and affiliates. Aramco has so far entered into over 100 CPAs.

The company launched iktva in 2015 with the goal of establishing a world-class supply chain in Saudi Arabia. Since its launch, the program has contributed more than $130 billion to Saudi Arabia’s gross domestic product, while creating more than 100,000 supply chain jobs for locals, Aramco said.

Related Article

Last month, Aramco announced the creation of a $1.5 billion sustainability fund to encourage investment in technology needed to support “a stable and inclusive” energy transition.

The fund will target investments globally and its initial focus areas will include carbon capture and storage (CCS), greenhouse gas emissions, energy efficiency, nature-based climate solutions, digital sustainability, hydrogen, ammonia and synthetic fuels.